Ex-Nortel executives charged with fraud

WASHINGTON (MarketWatch) -- Four former senior executives of Canadian telecommunications company Nortel Networks Inc. were charged with fraud Monday, with U.S. regulators alleging that they engaged in "egregious and long-running" accounting fraud.

Former Chief Executive Frank Dunn, former Chief Financial Officer Douglas Beatty, former controller Michael Gollogly and former assistant controller MaryAnne Pahapill were named in the complaint by the Securities and Exchange Commission. The four individuals served in their positions between September 2000 and January 2004.

"Each of the defendants betrayed Nortel's investors and their misconduct gave rise to billions of dollars in shareholder losses," said Linda Thomsen, enforcement director of the Securities and Exchange Commission.

The agency's complaint charges that the defendants altered Nortel's
NT
revenue-recognition policies to speed up revenue to meet forecasts, and improperly established and used reserves to meet earnings targets, fabricate profits and pay bonuses.

Toronto-based Nortel fired Dunn and a handful of other senior executives in 2004 after discovering a pattern of dubious accounting practices. The vendor has spent the past few years sorting out the accounting mess and restating results as far back as 2001.

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